Generally, employees are defined either under common law or under special statutes for certain situations.taxmap/pubs/p80-001.htm#en_us_publink1000104974
Generally, a worker who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. See Publication 15-A, Employer's Supplemental Tax Guide, for more information on how to determine whether an individual providing services is an independent contractor or an employee.taxmap/pubs/p80-001.htm#en_us_publink1000104975
There are also some special definitions of employees for social security, Medicare, and FUTA taxes.
While the following persons may not be common law employees, they are considered employees for social security and Medicare purposes if the conditions under Tests below are met.taxmap/pubs/p80-001.htm#en_us_publink1000104976
An agent (or commission) driver who delivers food or beverages (other than milk) or picks up and delivers laundry or dry cleaning for someone else.taxmap/pubs/p80-001.htm#en_us_publink1000104977
A full-time life insurance salesperson who sells primarily for one company.taxmap/pubs/p80-001.htm#en_us_publink1000104978
A homeworker who works by the guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates.taxmap/pubs/p80-001.htm#en_us_publink1000104979
A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. The orders must be for items for resale or used as supplies in the customer's business. The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. taxmap/pubs/p80-001.htm#en_us_publink1000104980
Withhold social security and Medicare taxes from statutory employees' wages if all three of the following tests apply.
- The service contract states or implies that almost all of the services are to be performed personally by them.
- They have little or no investment in the equipment and property used to perform the services (other than an investment in transportation facilities).
- The services are performed on a continuing basis for the same payer.
Persons in a
above are also employees for FUTA tax purposes if tests 1 through 3 are met (U.S. Virgin Islands only).
Publication 15-A gives examples of the employer-employee relationship.taxmap/pubs/p80-001.htm#en_us_publink1000104981
Certain direct sellers, real estate agents, and companion sitters are, by law, considered nonemployees. They are generally treated as self-employed for employment tax purposes. See Publication 15-A for details.taxmap/pubs/p80-001.htm#en_us_publink1000104982
If you incorrectly treated an employee as a nonemployee and did not withhold social security and Medicare taxes, you will be liable for the taxes. See Treating employees as nonemployees under Who Are Employees? in Publication 15 (Circular E), for details on Internal Revenue Code section 3509, which may apply.taxmap/pubs/p80-001.htm#en_us_publink1000104983
If you want the IRS to determine if a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.taxmap/pubs/p80-001.htm#en_us_publink1000104984
You are an employer of farmworkers if you are a crew leader. A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. If there is no written agreement between you and the farm operator stating that you are his or her employee, and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader.